IB 

Union Calendar No. 495 

115TH CONGRESS 

2D SESSION H. R. 4267 

[Report No. 115–646] 

To amend the Investment Company Act of 1940 to change certain requirements relating to the capital structure of business development companies, to direct the Securities and Exchange Commission to revise certain 

rules relating to business development companies, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

NOVEMBER 7, 2017 

Mr. STIVERS (for himself, Mr. SHERMAN, Mr. MCHENRY, and Ms. MOORE) 

introduced the following bill; which was referred to the Committee on Financial Services 

APRIL 24, 2018 

Additional sponsors: Mr. ROYCE of California, Mr. HIMES, Mrs. BEATTY, Mrs. 

WAGNER, Mr. PERLMUTTER, Mr. DAVID SCOTT of Georgia, Ms. TENNEY, 

Mr. WILLIAMS, Mr. GOTTHEIMER, Mr. MESSER, Mr. MEEKS, Mr. 

EMMER, Mr. BUDD, Mr. CLAY, Mr. HULTGREN, Mr. FOSTER, Mr. 

GRAVES of Georgia, Mr. FITZPATRICK, and Mr. HECK

APRIL 24, 2018 

Committed to the Committee of the Whole House on the State of the Union 

and ordered to be printed 


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A BILL 

To amend the Investment Company Act of 1940 to change 

certain requirements relating to the capital structure of 

business development companies, to direct the Securities 

and Exchange Commission to revise certain rules relating 

to business development companies, and for other purposes. 


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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Small Business Credit 

5 Availability Act’’. 

6 SEC. 2. EXPANDING ACCESS TO CAPITAL FOR BUSINESS DE7 VELOPMENT COMPANIES. 

8 (a) IN GENERAL.—Section 61(a) of the Investment 

9 Company Act of 1940 (15 U.S.C. 80a–60(a)) is amend10 ed— 

11 (1) by redesignating paragraphs (2) through 

12 (4) as paragraphs (3) through (5), respectively; and 

13 (2) by striking paragraph (1) and inserting the 

14 following: 

15 ‘‘(1) Except as provided in paragraph (2), the 

16 asset coverage requirements of subparagraphs (A) 

17 and (B) of section 18(a)(1) (and any related rule 

18 promulgated under this Act) applicable to business 

19 development companies shall be 200 percent. 

20 ‘‘(2) The asset coverage requirements of sub21 paragraphs (A) and (B) of section 18(a)(1) and of 

22 subparagraphs (A) and (B) of section 18(a)(2) (and 

23 any related rule promulgated under this Act) appli24 cable to a business development company shall be 

25 150 percent if— 


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1 ‘‘(A) within five business days of the ap2 proval of the adoption of the asset coverage re3 quirements described in clause (ii), the business 

4 development company discloses such approval 

5 and the date of its effectiveness in a Form 8– 

6 K filed with the Commission and in a notice on 

7 its website and discloses in its periodic filings 

8 made under section 13(a) of the Securities Ex9 change Act of 1934 (15 U.S.C. 78m(a))— 

10 ‘‘(i) the aggregate value of the senior 

11 securities issued by such company and the 

12 asset coverage percentage as of the date of 

13 such company’s most recent financial 

14 statements; and 

15 ‘‘(ii) that such company has adopted 

16 the asset coverage requirements of this 

17 paragraph and the effective date of such 

18 requirements; 

19 ‘‘(B) with respect to a business develop20 ment company that issues equity securities that 

21 are registered on a national securities exchange, 

22 the periodic filings of the company under sec23 tion 13(a) of the Securities Exchange Act of 

24 1934 (15 U.S.C. 78m(a)) include disclosures 


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1 reasonably designed to ensure that shareholders 

2 are informed of— 

3 ‘‘(i) the amount of indebtedness and 

4 asset coverage ratio of the company, deter5 mined as of the date of the financial state6 ments of the company dated on or most re7 cently before the date of such filing; and 

8 ‘‘(ii) the principal risk factors associ9 ated with such indebtedness, to the extent 

10 such risk is incurred by the company; and 

11 ‘‘(C)(i) the application of this paragraph to 

12 the company is approved by the required major13 ity (as defined in section 57(o)) of the directors 

14 of or general partners of such company who are 

15 not interested persons of the business develop16 ment company, which application shall become 

17 effective on the date that is 1 year after the 

18 date of the approval, and, with respect to a 

19 business development company that issues eq20 uity securities that are not registered on a na21 tional securities exchange, the company extends, 

22 to each person who is a shareholder as of the 

23 date of the approval, an offer to repurchase the 

24 equity securities held by such person as of such 

25 approval date, with 25 percent of such securiVerDate Sep 11 2014 21:16 Apr 24, 2018 Jkt 079200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6201 E:\BILLS\H4267.RH H4267

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1 ties to be repurchased in each of the four quar2 ters following such approval date; or 

3 ‘‘(ii) the company obtains, at a special or 

4 annual meeting of shareholders or partners at 

5 which a quorum is present, the approval of 

6 more than 50 percent of the votes cast of the 

7 application of this paragraph to the company, 

8 which application shall become effective on the 

9 date immediately after the date of the ap10 proval.’’. 

11 (b) CONFORMING AMENDMENTS.— 

12 (1) INVESTMENT COMPANY ACT OF 1940.—The 

13 Investment Company Act of 1940 (15 U.S.C. 80a– 

14 1 et seq.) is amended— 

15 (A) in section 57— 

16 (i) in subsection (j)(1), by striking 

17 ‘‘section 61(a)(3)(B)’’ and inserting ‘‘sec18 tion 61(a)(4)(B)’’; and 

19 (ii) in subsection (n)(2), by striking 

20 ‘‘section 61(a)(3)(B)’’ and inserting ‘‘sec21 tion 61(a)(4)(B)’’; and 

22 (B) in section 63(3), by striking ‘‘section 

23 61(a)(3)’’ and inserting ‘‘section 61(a)(4)’’. 


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1 (2) INVESTMENT ADVISERS ACT OF 1940.—Sec2 tion 205(b)(3) of the Investment Advisers Act of 

3 1940 (15 U.S.C. 80b–5(b)(3)) is amended— 

4 (A) by striking ‘‘section 61(a)(3)(B)(iii)’’ 

5 and inserting ‘‘section 61(a)(4)(B)(iii)’’; and 

6 (B) by striking ‘‘section 61(a)(3)(B)’’ and 

7 inserting ‘‘section 61(a)(4)(B)’’. 

8 SEC. 3. PARITY FOR BUSINESS DEVELOPMENT COMPANIES 

9 REGARDING OFFERING AND PROXY RULES. 

10 (a) REVISION TO RULES.—Not later than 1 year 

11 after the date of enactment of this Act, the Securities and 

12 Exchange Commission shall revise any rules to the extent 

13 necessary to allow a business development company that 

14 has filed an election pursuant to section 54 of the Invest15 ment Company Act of 1940 (15 U.S.C. 80a–53) to use 

16 the securities offering and proxy rules that are available 

17 to other issuers that are required to file reports under sec18 tion 13(a) or section 15(d) of the Securities Exchange Act 

19 of 1934 (15 U.S.C. 78m(a); 78o(d)). Any action that the 

20 Commission takes pursuant to this subsection shall in21 clude the following: 

22 (1) The Commission shall revise rule 405 under 

23 the Securities Act of 1933 (17 C.F.R. 230.405)— 

24 (A) to remove the exclusion of a business 

25 development company from the definition of a 


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1 well-known seasoned issuer provided by that 

2 rule; and 

3 (B) to add registration statements filed on 

4 Form N–2 to the definition of automatic shelf 

5 registration statement provided by that rule. 

6 (2) The Commission shall revise rules 168 and 

7 169 under the Securities Act of 1933 (17 C.F.R. 

8 230.168 and 230.169) to remove the exclusion of a 

9 business development company from an issuer that 

10 can use the exemptions provided by those rules. 

11 (3) The Commission shall revise rules 163 and 

12 163A under the Securities Act of 1933 (17 C.F.R. 

13 230.163 and 230.163A) to remove a business devel14 opment company from the list of issuers that are in15 eligible to use the exemptions provided by those 

16 rules. 

17 (4) The Commission shall revise rule 134 under 

18 the Securities Act of 1933 (17 C.F.R. 230.134) to 

19 remove the exclusion of a business development com20 pany from that rule. 

21 (5) The Commission shall revise rules 138 and 

22 139 under the Securities Act of 1933 (17 C.F.R. 

23 230.138 and 230.139) to specifically include a busi24 ness development company as an issuer to which 

25 those rules apply. 


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1 (6) The Commission shall revise rule 164 under 

2 the Securities Act of 1933 (17 C.F.R. 230.164) to 

3 remove a business development company from the 

4 list of issuers that are excluded from that rule. 

5 (7) The Commission shall revise rule 433 under 

6 the Securities Act of 1933 (17 C.F.R. 230.433) to 

7 specifically include a business development company 

8 that is a well-known seasoned issuer as an issuer to 

9 which that rule applies. 

10 (8) The Commission shall revise rule 415 under 

11 the Securities Act of 1933 (17 C.F.R. 230.415)— 

12 (A) to state that the registration for secu13 rities provided by that rule includes securities 

14 registered by a business development company 

15 on Form N–2; and 

16 (B) to provide an exception for a business 

17 development company from the requirement 

18 that a Form N–2 registrant must furnish the 

19 undertakings required by item 34.4 of Form N– 

20 2. 

21 (9) The Commission shall revise rule 497 under 

22 the Securities Act of 1933 (17 C.F.R. 230.497) to 

23 include a process for a business development com24 pany to file a form of prospectus that is parallel to 


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1 the process for filing a form of prospectus under 

2 rule 424(b). 

3 (10) The Commission shall revise rules 172 and 

4 173 under the Securities Act of 1933 (17 C.F.R. 

5 230.172 and 230.173) to remove the exclusion of an 

6 offering of a business development company from 

7 those rules. 

8 (11) The Commission shall revise rule 418 

9 under the Securities Act of 1933 (17 C.F.R. 

10 230.418) to provide that a business development 

11 company that would otherwise meet the eligibility re12 quirements of General Instruction I.A of Form S–3 

13 shall be exempt from paragraph (a)(3) of that rule. 

14 (12) The Commission shall revise rule 14a–101 

15 under the Securities Exchange Act of 1934 (17 

16 C.F.R. 240.14a–101) to provide that a business de17 velopment company that would otherwise meet the 

18 requirements of General Instruction I.A of Form S– 

19 3 shall be deemed to meet the requirements of Form 

20 S–3 for purposes of Schedule 14A. 

21 (13) The Commission shall revise rule 103 

22 under Regulation FD (17 C.F.R. 243.103) to pro23 vide that paragraph (a) of that rule applies for pur24 poses of Form N–2. 


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1 (b) REVISION TO FORM N–2.—Not later than 1 year 

2 after the date of enactment of this Act, the Commission 

3 shall revise Form N–2— 

4 (1) to include an item or instruction that is 

5 similar to item 12 on Form S–3 to provide that a 

6 business development company that would otherwise 

7 meet the requirements of Form S–3 shall incor8 porate by reference its reports and documents filed 

9 under the Securities Exchange Act of 1934 into its 

10 registration statement filed on Form N–2; and 

11 (2) to include an item or instruction that is 

12 similar to the instruction regarding automatic shelf 

13 offerings by well-known seasoned issuers on Form 

14 S–3 to provide that a business development company 

15 that is a well-known seasoned issuer may file auto16 matic shelf offerings on Form N–2. 

17 (c) TREATMENT IF REVISIONS NOT COMPLETED IN

18 TIMELY MANNER.—If the Commission fails to complete 

19 the revisions required by subsections (a) and (b) by the 

20 time required by such subsections, a business development 

21 company shall be entitled to treat such revisions as having 

22 been completed in accordance with the actions required to 

23 be taken by the Commission by such subsections until such 

24 time as such revisions are completed by the Commission. 


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1 (d) RULE OF CONSTRUCTION.—Any reference in this 

2 section to a rule or form means such rule or form or any 

3 successor rule or form. 


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Union Calendar No. 495 

115TH CONGRESS 

2D SESSION H. R. 4267 

[Report No. 115–646] 

A BILL 

To amend the Investment Company Act of 1940 to 

development companies, and for other purposes. sion to revise certain rules relating to business to direct the Securities and Exchange Commisital structure of business development companies, change certain requirements relating to the capAPRIL 24, 2018 

Committed to the Committee of the Whole House on the 

State of the Union and ordered to be printed 


daltland on DSKBBV9HB2PROD with BILLS